Hello ! Sorry for being very green and asking the same questions mentioned on other posts but I just need to clarify something.
Is it acceptable especially when you plan to buy multiple properties to but a deposit of $100-500 per property ? Is it better to use deposit bonds ?I gather that deposits can be negotiated and it doesn’t need to be 3/5/10% of the purchase price ?
Is it necessary to follow up with a 3/5/10% deposit if you like the property. i.e. can you settle right away paying the full amount (of course subject to building inspections etc) ?
Of course I want to use as little as my money as possible and use the banks !
Thanks
The Wizard
Hi Wizard,
Do you mean the initial deposit when you are signing a contract? In QLD I have been advised by solicitors that there is no minimum amount required – of course agents will always ask for as much as possible. Ive never put down more than $500 and know others that have put down $100.
I have never followed up with the 10% etc, but i think it depends on the type of property you are buying. Many ‘off the plan’ developments require a 10% deposit. Often this is actually a requirement of the financier behind the development as a condition for providing the devloper with funds to complete the project.
I imagine you can settle with the full cash amoutn as soon as possible, I dont know why you would do that unless you are receiving some large financial benefit from owning it immediately.
I hope this helps a little.
cheers
Todd
http://www.providence.net.auTodd O’Neill
http://www.meteorpartners.com
‘Move to the next level’If you don’t have another property then you would probably have to front up with a deposit.
I’ve bought a property which I didn’t want to put any money into, so just with $100, but I used another property as collateral with the bank, so when the deposit became due, I borrowed it from the bank rather than use my own money.
I only had about 2000 dollars in the bank when i bought my ip. but i had plenty of equity to use as a 20% deposit. when i made the offer i just told them that i was only going to give them a 1000 dollar holding deposit until funds became available. what ended up happening was, the vendor was a very nasty piece of work and was demanding money for the fittings in the house. she even had the gall to demand 5000 dollars. i ended up giving her the 1000 dollars for it, then reduced the asking price of the IP from 210 to 209k, saved myself a little in stamp duty anyway.
When I have signed contracts with $1000 deposit, balance is payable on settlement.
I think there is some clause in the contract that says ‘Should you fall over and the contract does not complete, you owe the remainder of the 10% as a debt to the vendor’ (of course, these are not the exact words, but you get the picture).
A deposit can be anything you negotiate – you could use your car, or boat, or bike etc. Agents will try and get as much out of you as possible, cos that’s where their commission comes from, and they are guaranteed of getting it if it’s in their trust account. Otherwise, it has to come at settlement through the solicitor, and if contract doesn’t complete, it’s harder for them to get it.
Cheers
MelMel this is true.
However I recently tried to neg a 5% deposit and the vendors solicitor crushed it. His grounds were that if I shot through and had to forfeit that 10% then they would have to chase me for the extra 5%.
Made sense to me and good advice to the vendor I thought.
Cheers,
Simon Macks
Mortgage Broker
[email protected]
0425 228 985Comments may not be relevant to individual circumstances. If you intend making any investment, financial or taxation decision you should consult a professional adviser.
Hey Simon, absolutely good advice – for a vendor!
As a purchaser I would definitely push them to accept a lower deposit – and in fact have never paid more than 5%.
As a vendor, it depends how keen I am to sell if I will accept less than 10%. I haven’t yet accepted less than 5% though – not on a property that went on to exchange anyway.
Cheers
Mel
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